Morocco’s central bank raises key interest rate to stem soaring inflation

RABAT - Morocco's Bank Al Maghrib's (BAM) raised the key interest rate by 50 basis points to 3% in a bid to stem a soaring inflation.

At its first 2023 quarterly meeting, the BAM Board of Directors said that this measure aims to prevent the emergence of self-sustaining inflationary spirals and to further strengthen the anchoring of inflation expectations to promote its return to levels consistent with the objective of price stability.

The Council confirms that it will continue to closely monitor economic developments and inflationary pressures at both the national and the international level.

At this meeting, the BAM Board analyzed the evolution of the national economic situation and the Bank's macroeconomic projections for the next eight quarters, focusing in particular on the transmission of its recent decisions to raise the key interest rate.

The BAM’s move came as inflation rose again to 10.1% year on year in February 2023 in the North African country, driven by food prices up 20.1%, according to figures from the High Commission for Planning (HCP). 

The high price increases of several food products and mainly those of vegetables have largely contributed to this rebound. 

“The increases therefore mainly concern “Vegetables” with 17.8%, but also “Fruits” with 5.7%, “Meats” with 4.3%, “Milk, cheese and eggs” with 2.3%, “Oils and fats” with 1.3%, “Coffee, tea and cocoa” with 0.5% and “Mineral waters, soft drinks, fruit and vegetable juices” with 0.3 %,” explained the HCP’s report.

Compared to January 2023, inflation rose by 1.7%, the result of the 3.9% increase in the food products index and the stagnation of the non-food products index.

Soaring food prices are proving a further concern for Moroccan consumers celebrating the holy month of Ramadan.

“The price of tomatoes, which is the main ingredient in our traditional soup (harira), is still very high,” said Houcine Regragui, a father of four children.

“This is a government that promised to improve our standard of living. But instead, we are being punished very hard for voting for Aziz Akhannouch’s party,” he added.